When the United Kingdom (UK) voted to leave the European Union (EU) last month, shockwaves reverberated from across the pond to here in the United States, including in the global supply chain industry and insurance markets. However, leaders of the London commercial marine market were quick to calm fears, with John Nelson, chairman of Lloyd’s, assuring policy holders across the world that it’s ‘business as usual’. In fact, within 20 minutes of the official result being announced, Nelson said the market had drawn up contingency plans and was “fully equipped” to operate outside the European single market.

Nelson in his statement said, “I am confident that Lloyd’s will stay at the center of the global specialist insurance and reinsurance sector, and I look forward to continuing our valuable relationship with our European partners…For the next two years our business is unchanged. Lloyd’s has a well-prepared contingency plan in place and will be fully equipped to operate in the new environment.”

Dave Matcham, CEO of the International Underwriting Association of London (IUA), also released a statement saying that the London insurance market is “resilient” and “well-positioned to respond to the result of the referendum on the UK’s membership of the EU”. He also said that insurers have been preparing for the possibility of a vote to leave and had considered how to adapt their business plans in response to new trading conditions.

Among others that also commented on the UK’s decision to leave the EU was Standard & Poor’s (S&P), saying that the leave vote is not expected to lead to rating actions on UK insurers. “We see the insurance sector as less exposed to the leave vote than the rest of the financial sector.”

The insurance sector represents about one-third of the UK’s financial services net export surplus, but it is more reliant on trade with non-EU countries – especially the US, said S&P, noting that the sector is also a “very limited recipient of inward investment.”

“Even in the absence of any trade agreements or passporting rights, we believe that UK insurers operating in the EU could, through appropriate planning, continue their businesses largely uninterrupted. The same would apply for EU insurers who currently trade in the UK through branches,” said S&P.

The ratings agency also acknowledged that there will be a period of uncertainty while treaties or other arrangements are negotiated between the UK and the EU, which could weigh on insurers’ investment returns and possibly on the rate of future economic growth. “However, we do not now believe that these potential issues are likely to lead to immediate rating actions on insurers.”

Roanoke Underwriting specializes in providing agent and brokers with commercial marine insurance solutions for global trade and logistics risks, and will continue to keep you abreast of any impact Brexit may have on our industry.  For more information about our portfolio of products, please contact us at 1.855.213.4545.

Hurricane forecasts have come out from several sources, including from Colorado State University, which recently predicted the Atlantic will produce a near-normal 12 storms during the six-month hurricane season that officially began June 1st. Of the 12 storms, five could become hurricanes and two could grow into major systems of Category 3 or stronger. The U.S. has a 50% chance of being struck by a major hurricane, just below the 20th century average of 52%, according to Colorado State University. Major disruptions caused by a hurricane or severe storm can result in facility damage and delays to all businesses including in the global trade and logistics sector.

To help prepare clients for this hurricane season and minimize potential property damage or business interruption should a catastrophe occur, there are certain measures that the global trade and logistics industry should take – from manufacturers, importers, exporters, distributors, and wholesalers to transportation service companies including customs brokers, freight forwarders, property brokers, 3PLs and warehouse operators. These risk management and loss control measures include the following.

Pre-Hurricane Preparation

  • Ensure clients have a comprehensive written hurricane/catastrophe emergency plan in place that is designed to mitigate exposures. The plan should be comprised of the following:
    • Emergency roles assignments and responsibilities. This should include a crisis team that can make decisions and communicate them across the supply chain to launch an effective response. Provide training on these responsibilities on a yearly basis at minimum.
    • A set of procedures outlining what to do. Anticipate steps to take and run different scenarios (best, average, worst-case) by the team.
    • Assembly of emergency supplies and equipment at a safe location, including plastic tarps, maps, emergency lighting, battery-operated radio, tape for windows, lumber, and nails, etc.
    • Plan for salvage and recovering, including lining up key contractors and vendors to assist with recovery services.
    • Line up suppliers: Nurture strong relationships with several suppliers to provide flexibility if/when disaster strikes and you need to secure resources from an alternate provider.
    • A business continuity plan: Develop process-level plans that map solutions to the risks and strategies you identify. Encourage internal supply chain teams and external vendors, technology providers and supply chain partners to help develop the plan. Also, have a backup plan for every supply chain stakeholder. At the very least, focus on the vendors and partners most essential to the day-to-day operations of the company’s supply chain. Review vendors’ business continuity/disaster recovery plans and work with them to get all plans in sync. Review plan annually.
  • Stay informed, monitoring the status of the hurricane as it develops.
  • Secure the facility’s roof, and repair any potential problems.
  • Protect exterior windows and doors. Consider installing wind-resistant windows.
  • Fuel up – this includes generators, fire pumps, company-owed vehicles; fill aboveground tanks to capacity to prevent wind damage.
  • Secure assets: This includes all nodes in the supply chain: production facilities, distribution centers, fleet, terminals, suppliers, etc. In short, anything that could be sidelined by a disaster. Make sure the company has the products and supplies needed when the disaster is over.
  • Protect computers, stock, and essential machinery, and consider moving valuable and/or critical stock and materials to a safe location.
  • Prepare for flooding.
  • Make preparations to shut down operations temporarily if needed.
  • Have an evacuation plan: Outline detailed plans for evacuation and shelter-in-place plans and practice regularly. Know where to go if asked to evacuate. Make note of alternate routes if major roads are clogged or close. Establish backup locations for key facilities and a central meeting place for employees.

During Hurricane

  • Ensure emergency response team remains at a facility if it’s safe and is prepared to respond.
  • Continue to stay up to date on the weather, monitoring and tracking the hurricane’s or storm’s landfall, and update management and maintenance.
  • Inspect the property (if not dangerous) and look out for roof leaks, pipe breakage, fire or structure damage.
  • Monitor all equipment throughout the hurricane.
  • If there is a power failure, turn off all electrical switches to prevent reactivation before necessary checks are completed.

After a Hurricane

  • Secure site to prevent any one who is not authorized to enter.
  • Contact broker/insurer for claims adjusting and immediate damage assessment.
  • Organize emergency crews for salvage and cleaning operations.
  • Notify utility companies of any outages or damages.
  • Notify contractors to begin repairs if it’s safe to do so.
  • Initiate salvage operations.
  • Review effectiveness of the disaster plan and revise if needed.

Roanoke Underwriting assists agents and brokers in securing the proper insurance solutions for your clients. We provide broad coverage at competitive pricing and are available to facilitate the proposal process in putting together an insurance portfolio that addresses you client’s risk profile. For more information about our products, contact one of our specialists at 1.855.213.4545.

Last August, dual blasts at the port of Tianjin in China where chemicals were being stored killed more than 100 people and destroyed buildings and goods within a 3.1-mile radius. Access to the area of the explosion was restricted from the onset, but one interesting aspect of this disaster was the extensive use of satellite and drone technology to support the claim management process.

Before the disaster occurred, a satellite had taken detailed pictures of the areas later affected. Four days after the disaster, another satellite captured further images and information. The data of both satellites provided a comprehensive collection of all affected cars, containers, and buildings. In fact, Reuters had reported at the time that the U.S. Geological Survey when viewing the satellites registered the blasts as seismic events.

The satellite images provided valuable information about the extent and, to a certain point, degree of damage. Combining this spatial knowledge with data mining and web-crawling methods could establish the link to the individual insureds affected.

Moreover, data from drones served to complement the information provided by the satellites. The copter drones (depending on flight altitude) were able to capture areas with a resolution of just a few centimeters. This data could be used to actually fill the gap in loss assessments where available satellite data are either too poor in terms of resolution or cost-intensive. In fact, the insurer of the blast, People’s Insurance Company of China (PICC), used the drones to compare satellite photographs of the site ahead of the blast with high-resolution images taken later by drones, and were able to determine how many vehicles had been destroyed and total the losses for German automaker Volkswagen.

The combination of satellite and drone data might also lead to a better understanding of loss events and their causes. For example, data from satellite and drones revealed that the explosion crater (100 meters in diameter) in Tianjin was situated outside the housed storage areas. This is what led to the conclusion that the chemicals responsible for the explosion must have been stored in the open. Existing standards of storage obligations will help to reduce the chances of such an event recurring, provided, of course, that the standards are followed.

Roanoke Underwriting provides agent and brokers with a total commercial marine insurance solution for global trade and logistics risks. This includes companies with global supply chains, 3PLs, freight forwarders and property brokers, and custom brokers. To learn more about our portfolio of products, please contact us at 1.855.213.4545.

Roanoke Underwriting is hosting a complimentary webinar on Tuesday, July 12th at 12pm CT. Vice President Sergio Laos will discuss five fundamentals of selling cargo insurance.

Join us as we explore:

  • Basic coverage terms and conditions
  • Common misconceptions – Legal Liability vs. “All Risks”
  • Acts of God exposures and coverage
  • Who needs cargo insurance
  • Where to look and what to ask

Contact us at underwriting@roanokegroup.com or click the button below to register today!

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Cargo crimes reported to the Transported Asset Protection Association’s (TAPA) Incident Information Service (IIS) in the Europe, Middle East, and Africa (EMEA) region reached a three-year high in the first quarter of 2016. According to the report, there was an average of nearly five incidents every day resulting in millions of euros of losses for manufacturers and logistics service providers. On the heels of this news, TAPA last month stated that greater efforts by law enforcement agencies and insurers to share cargo crime data is needed to enable manufacturers and logistics service providers to further protect high value/theft attractive goods in supply chains and relieve the pressure on police forces dealing with the growing number of incidents in the EMEA region.

Thorsten Neumann, Chairman of TAPA EMEA, said: “Our members are able to operate more resilient supply chains because they can use the intelligence we already receive from some police forces to avoid known ‘hotspots’ for cargo crimes and to protect their facilities and vehicles against the types of attacks we know are taking place several times a day in Europe alone. We already receive data from law enforcement agencies in the United Kingdom, Netherlands, Germany, and Sweden and now we have a commitment from French police to also share data with our IIS. However, we need much more crime intelligence from across the EMEA region if the industry is to help the police tackle this issue. Similarly, we are asking more insurers to help us gain a better understanding of the true level of cargo crime, which remains massively under-reported.”

According to TAPA, overall 444 incidents were reported to IIS in the region in the first three months of 2016 – that’s a 115% increase year-on-year. This is compared to 216 and 206 freight thefts recorded by TAPA in the first quarters of 2014 and 2015 respectively. Thefts of products from supply chains were reported in 19 countries in EMEA in Q1 2016 and included 29 major losses with a value of more than €100,000. The total loss for the 24.1% of incidents reporting a value was €7,979,623, producing an average loss of €74,547, said TAPA in a press release.

Moreover, TAPA’s incident intelligence data shows that 86.2% of cargo thefts in the three months occurred in four countries: 131 new incidents were reported in the United Kingdom, 126 in the Netherlands, 86 in Germany and 40 in Sweden. All four countries recorded an increase year-on-year as a result of increased sharing of incident data by police authorities. France, South Africa, and Italy recorded a further total of 32 cargo crimes. The UK also recorded most of the major cargo crimes, 13 in total, followed by Germany with seven.

A wide variety of products continue to be targeted by cargo thieves, as reported previously in 2015 by TAPA. The Food & Drink category recorded the highest number of theft incidents, followed by Clothing & Footwear, Computers/Laptops, Furniture/Household Appliances, Cosmetics & Hygiene and Tools/Building Materials. TAPA also said that cargo thieves targeted Tobacco, Tires, Toys & Games, Bicycles, Metal, Sports Equipment, Pharmaceuticals, Car Parts, Cash and Phones in the supply chains.

Cargo thefts involving trucks continued to dominate recorded crimes in the quarter with 56.3% of losses or 250 incidents involving theft from a vehicle. Lack of secure parking locations, particularly on major trade routes across Europe, continues to be problematic. The majority of freight thefts, according to TAPA, took place when vehicles were stopped at motorway services, in lay-bys along main highways, or on industrial estates while drivers took their required rest breaks. Losses involving unsecured parking locations accounted for 55.7% or 247 of the incidents reported to TAPA in the EMEA region from January to March 31.

“We do not know the full extent of cargo crime in EMEA nor globally, said Mr. Neumann. “We do know, however, that we are barely scratching the surface of the number of incidents we believe are happening in some major countries in our region. The best way to help fight cargo crime is through a public-private partnership where we all contribute to making supply chains safer. That is the fastest route to putting cargo criminals out of business – and that is the message we will continue to communicate in our discussions with INTERPOL, Europol, the European Commission and insurance organizations. We are all in this together.”

Roanoke Underwriting provides agent and brokers with a total commercial marine insurance solution, including worldwide marine cargo coverage, for global trade and logistics risks. This includes companies with global supply chains, 3PLs, freight forwarders and property brokers, and custom brokers. To learn more about our portfolio of products, contact us at 1.855.213.4545.

On Tuesday, June 7th Colleen Clarke will be part of an AAEI Conference panel titled “Don’t Trek on Me”. Colleen, along with Randy Rucker of Drinker, Biddle & Reath, Jenae Ciecko of Copper Hill Inc. and Beata Spuhler of 3M, will discuss recent cases that highlight what can happen to companies and individuals not compliant in their international trade activities and why understanding the current compliance landscape is imperative to avoid potential liability in trade activities. Colleen will also speak on trending bond liability issues and case studies from the surety perspective. If you are attending the 2016 AAEI conference, this is one session you don’t want to miss! For more information on this presentation, and other sessions taking place at AAEI 2016, please click here.

Climate change as defined by NASA could involve a change in the Earth’s average temperature, or it could be a change in the Earth’s typical precipitation patterns as defined by NASA. The Earth’s climate, in fact, is always changing. In the past, Earth’s climate has gone through warmer and cooler periods, each lasting thousands of years. More recent observations show that Earth’s climate has been warming, with its average temperature rising a little more than one degree Fahrenheit during the past 100 years or so. This amount may not seem like much, but however small these changes may seem in the Earth’s average temperature, they can lead to big impacts including changing import-export values and volumes.

Datamyne, which offers access to the world’s largest database of import-export data and international trade statistics, working from the Union of Concerned Scientists Climate Hot Map, analyzed its trade data on several products being altered by rising temperatures and found the following:

  • Rising sea levels have caused the Gulf Coast wetlands to slip away along with its shellfish and other seafood. As a result, the U.S. is increasingly turning abroad to meet consumer demand for shrimp. The value of shrimp imports went from $2.9 billion in 2009 to $4.3 billion in 2015.
  • We’re also seeing a rise in oyster imports as a result of greater acidity in the ocean and shellfish being destroyed. The money spent on oyster imports went from $20.6 million in 2009 to $39.9 million in 2015.
  • Rising temperatures are also affecting the global coffee belt with exports from Costa Rica down while the price of coffee is up. In 2013, we spent $230 million for 67.1 Mil. Kg of Costa Rican Arabica coffee; in 2014, we spent $250 million for 64. Mil. Kg, and in 2015 we spent $275 million for 62.5 Mil. Kg.
  • A drier climate is affecting the German beer market with fewer exports to the U.S. and other countries. Brewers are paying more or finding alternatives.
  • The U.S. is importing more wine from the U.K. due to its warmer temperatures. In 2011, our British wine imports were at $3.7 million; in 2015 imports were at $8.1 million.

Roanoke Underwriting provides agent and brokers with a total commercial marine insurance solution for global trade and logistics risks. This includes companies with global supply chains, 3PLs, freight forwarders and property brokers, and custom brokers. To learn more about our portfolio of products, contact us at 1.855.213.4545.

National Retail Federation and Hackett Associates’ monthly Global Port Tracker report shows that, despite a fall-off from last year’s record-setting numbers, import cargo volume at the nation’s major retail container ports is expected to be at some of its highest levels ever during the next few months. “Retailers are importing less merchandise than last year but these are still some of the highest numbers we’ve ever seen,” commented NRF Vice President for Supply Chain and Customs Policy Jonathan Gold. “Carefully managing imports will balance out high inventory levels but consumers can still expect to see a deep and broad selection of products.”

According to the Global Port Tracker, U.S. ports in March handled 1.32 million Twenty-Foot Equivalent Units (TEU), which is down from February of this year and lower than the all-time record set last year in March after a flood of backlogged cargo made its way through West Coast ports following a near-shutdown over a contract dispute with dockworkers. One TEU is one 20-foot-long cargo container or its equivalent.

Estimates for April are at 1.5 million TEU, May is forecasted at 1.57 million TEU, June at 1.56 million TEU, July at 1.61 million TEU, August at 1.62 million TEU, and September at 1.56 million TEU – all slightly lower than last year but still high. In fact, this year’s forecast peak of 1.62 million TEU in August would still be among the six highest months on record. And, overall, the first half of 2016 is expected to total 9 million TEU, up 1.4% from the same period in 2015, due to the strength of this past February’s surge in containerized cargo shipments.

Global Port Tracker covers the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle, Tacoma, New York/New Jersey, Hampton Roads, Charleston, Savannah, Port Everglades, Miami and Houston.

The continued brisk business in cargo imports is good for importers, in addition to the custom brokers and logistics service providers involved in supply chain.  Roanoke Underwriting is well positioned to assist you in securing the proper insurance solutions for your clients. We provide broad insurance coverage at competitive pricing and are available to facilitate the proposal process in putting together the right mix of policies for your client’s risk profile. For more information about our products, contact one of our specialists at 1.855.213.4545.

Emerging technologies are revolutionizing businesses across a broad spectrum of industry sectors. We see it in manufacturing with “Industry 4.0” where smart technology and real-time data are used to increase productivity and reduce costs (for example, 3D printing). We see it with the future of self-driving cars in the automotive industry; and we even see it in our own industry with the launching of online peer-to-peer insurance sites and other platforms. Disruptive and emerging technologies are now set to also reshape the shipping industry.

One such technology is the hyperloop, which uses vacuum tubes to push capsules containing cargo or passengers between locations at speeds exceeding 550 mph, reducing the hours of travel time down to a matter of minutes. This technology, a mere idea of inventor and entrepreneur Elon Musk’s (Tesla) just a few years ago, has now been fast-tracked, as Hyperloop Transportation Technologies announced earlier this year that it has received a permit to begin construction of a five-mile stretch of a full-scale passenger and freight Hyperloop system next to California’s I-5 freeway. The company, according to Global Trade Magazine, will be ready in just 36 months.

Hyperloop has the ability to transport standard shipping containers, while averting many of the hassles of overbooked cargo ships, closed ports, and bad weather. It will also be less prone to accidents and casualties, given the system’s isolation from other traffic. Moreover, it will ease traffic congestion on America’s roads. According to Engadget, “A huge cause of congestion on roads is freight traffic—eighteen-wheelers carrying cargo containers from ports to warehouses. The Port of Los Angeles is one of the largest points of entry for containers into the U.S., and much of that is taken east by road. Imagine if, instead, containers were pushed via Hyperloop to a new logistics center in Nevada; it would cut thousands of road journeys each year. Yup, Hyperloop could even do something to reduce LA’s notoriously awful traffic.”

Hyperloop is just one of a number of emerging technologies on the scene that could potentially redefine logistics. The use of drones, for instance, by logistics companies for product delivery could well be on the horizon. According to one report, about 31% of manufacturers and retailers want to see logistics companies use drones for product delivery, even though the majority of 3PL companies are not ready at this time. Nevertheless, the opportunity for drones may be in warehouses and distribution centers in the not-so-distant future. Peter Sondergaard, senior vice president and global head of research at Gartner, told an audience of supply chain executives that he predicts that five years from now drones will be standard in the supply chain. Moreover, he said, “By 2018, 5% of companies with complex picking operations will pilot mobile self-navigating and smart warehouse robots.”

Additive technology will also impact shipping and logistics with many manufacturers and retailers using 3D printing to produce products. Additive technology is a slow procedure in which a printer reads a digital blueprint and methodically drops building material according to a set of instructions, creating a final product that’s built up tiny layer by tiny layer. According to Global Trade Magazine, “on-demand production has huge implications for the supply chain, not to mention favorable environmental results via reduced transport, pollution, and production waste.”

Ed Morris, director of NAMII, the federally funded initiative set to define and promote the future of the 3D industry, underscores the effect on this technology on the logistics industry: “In terms of the impact on inventory and logistics,” he says, “you can print on demand. Meaning you don’t have to have the finished product stacked on shelves or stacked in warehouses anymore. “Whenever you need a product,” he explains, “You just make it. And that collapses the supply chain down to its simplest parts, adding new efficiencies to the system.”  Those efficiencies run the entire supply chain, from the cost of distribution to assembly and carry, all the way to the component itself, all the while reducing scrap, maximizing customization and improving assembly cycle times.

Everything from material handling to inventory management to supply chain management to procurement will be impacted by these and other emerging technologies. These innovations will help significantly increase the interconnectedness across companies, and have the potential of reducing costs, timelines and processes.

Roanoke Underwriting specializes in providing insurance solutions to importers, exporters, logistics service providers and transportation intermediaries and is available to assist agents and brokers in securing the coverage your insureds require. For more information about our products, contact one of our specialists at 1.855.213.4545.

 

 

Last year, the International Maritime Organization (IMO) announced its amendments to the Safety of Life at Sea (SOLAS) convention, which requires shippers to provide verified gross mass (VGM) to carriers either through physically weighing a laden container or by adding weight of the cargo (including pallet, dunnage and packaging weight) to the tare weight of the container. The VGM rule, in effect beginning on July 1, requires shippers or LSPs (whoever is named as the master shipper on the bill of lading) to sign off on the VGM data before submitting it to the carriers. However, shippers have voiced concern about this process, as it could create liability issues. In other words, the person able to physically (or digitally) sign the VGM might not be allowed to do so for liability reasons.

As a result, as the July 1 deadline fast approaches, there is much confusion in the shipping industry, so much so that many are calling for a delay in the requirement and/or further clarification.

The lack of preparedness and confusion in the industry was underscored in a recent global survey conducted by provider CargoSmart of 820 customers (about 57% LSPs and 38% shipping). Only 4% had a solution in place to deal with the rule, 36% of respondents had not yet started planning, 20% were not aware of the new requirements, and 20% were in the discussion stage with several parties, according to CargoSmart’s research.

When asked about the best method to submit the VGM data to carriers, 59% of respondents in the survey preferred doing so along with the shipping instructions, while 20% said it should be in the booking request, shipping instructions, or in a separate document, depending on the trade route. Ten percent (10%) preferred to submit the VGM in a separate document. Separate research conducted by American Shipper in March supports how unprepared the industry is, with nearly 60% saying they did not understand how to comply with the VGM rule.

Fitch Ratings Weighs In on New VGM Rule at U.S. Ports

In February, Fitch Ratings, which rates U.S. ports, stated that the ports have neither designated facilities for weighing containers nor the systems for the verification of container weights, putting into question their ability to implement the IMO’s new weight verification requirements. The rating agency, in fact, believes that this could raise already chronic congestion at the ports that are slowed by chassis management issues, higher cargo loads from larger vessels and inadequate inland or intermodal links.

Roanoke Underwriting serves the commercial marine insurance and customs bond needs of property and casualty agents and brokers throughout North America working with global supply chain risks and logistics service providers. We are committed to keeping you current on issues that affect this industry, and will continue to do so regarding the new SOLAS requirement. (You can visit http://www.worldshipping.org/industry-issues/safety/cargo-weight for detailed information on SOLAS container weight requirement including the impact of this new ruling on third-party logistics companies.) To learn more about our insurance products, contact us at 1.855.213.4545.